FEDERAL PROPERTY FUND

The State Property Committee agency charged with receiving and overseeing privatization of state enterprises designated for privatization began operations in October 1992 (under Anatoly Chubais) in what became a large–scale sale of state enterprises. The first stage was voucher privatization. Vouchers were sent to every man, woman, and child in Russia. These voucher checks could be used to purchase shares in what had previously been state enterprises. Or they could be invested in managed mutual funds or sold on the secondary market.

Enterprises slated for privatization were transferred to the Federal Property Fund. The initial stage of privatization excluded enterprises of national significance, such and oil and electric generation and those of military or strategic significance. Large scale, non-military enterprises were transferred subsequently in 1994–1995 and many were auctioned off under what was called the "loans for shares" program. When enterprises were transferred to the Federal Property Fund they were required to be converted into open joint stock companies before privatization. The Federal Property Fund was to oversee this transformation and supervise the privatization process.

In the end the Federal Property Fund participated in the largest privatization program in economic history, one that was replete with insider advantages, corruption, bribery, and scandalous underpayment by the ultimate owners. Privatization was also incomplete because the government maintained either a majority ownership or "golden shares" that allowed a veto over management decisions.

See also: privatization

bibliography

Gregory, Paul R., and Stuart, Robert C. (2001). Russian and Soviet Economic Performance and Structure, 7th ed. New York: Addison Wesley.

Hedlund, Stefan. (1999). Russia's "Market" Economy: A Bad Case of Predatory Capitalism. London: UCL Press.

James R. Millar